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It's Now Obama's Housing Market: Street Whispers

NEW YORK (
TheStreet) --President Obama's re-election Tuesday offers him a second shot at fixing the economy and, thereby, the housing market.

Or is it fixing the housing market and, thereby, the economy?

The two are inextricably linked, which is why the President cannot afford to put housing issues on the backburner, even amid signs of a recovery in home prices.

Housing data in recent months have been encouraging, with the S&P Case Shiller 20-city index showing a 2% rise in August on a year-on-year basis. Housing prices in September rose 5% over a year ago, according to Core Logic , the best showing since July 2006.

The supply of homes has tightened significantly, particularly in former housing bubble states, which have worked through the bulk of their foreclosures. Lower share of distressed sales has eased the pressure on home prices. Rock-bottom interest rates have stimulated demand for homes, though the bulk of the purchases are still investor-driven.

But mortgage credit still remains largely unavailable to home buyers, unless they happen to meet the most stringent of credit quality requirements. And more than 10 million borrowers remain underwater- owe more than their homes are worth- and are struggling to refinance their debt amid low interest rates or sell their homes even as the market rebounds.

The Obama Administration has over the past four years launched a slew of programs to help revive the housing market and offer relief to borrowers. But many of the early government programs to help borrowers modify their home loans or refinance their mortgages fell grossly short of targets.

In the fall of 2011, the Treasury revamped the Home Affordable Refinance Program to allow borrowers with loans backed by
Fannie Mae(FNMA) and
Freddie Mac(FMCC) who were current on their payments to refinance their mortgages, even if they were deeply underwater. Previously, borrowers could refinance only if their loan-to-value ratio was less than 125%.

The newly improved refinancing program has helped boost refinancing applications significantly. More than 1.6 million borrowers have refinanced under HARP to date, of which 618,217 refinances took place in 2012, according to KBW Research.

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